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Mutual Fund Commentary

The healthcare sector is one of the most desirable avenues for parking investments when markets are headed south. The demand for such services usually remains unchanged even during an economic downturn and investments in the sector provide sufficient protection to the capital invested. Several pharmaceutical companies also provide regular dividends, which can help mitigate losses from falling share prices. Healthcare mutual funds provide the perfect avenue for investors looking to invest in this sector.

Below we will share with you 5 top rated health mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all health funds, investors can click here to see the complete list of funds.

ProFunds UltraSector Health Care (HCPSX - Free Report) seeks daily returns which are 150% of the daily return of the Dow Jones U.S. Biotechnology Index. The fund invests in equity securities and derivatives that in the opinion of the fund advisors possess daily return characteristics identical to one and a half times the daily return of the Dow Jones U.S. Health Care Index. The healthcare mutual fund returned 28.39% over the last one year.

As of October 2013, this fund held 117 issues with 7.17% of its assets invested in Johnson & Johnson.

Invesco Global Health Care A (GGHCX - Free Report) invests a lion’s share of its assets in companies related to heath care industry. It also invests in other instruments with similar characteristics to that of these health care firms. Though investments are made irrespective of the market capitalization of securities, major portion of the assets are parked in small to mid capitalization firms. The healthcare mutual fund has returned 20.44% over the last one year.

Derek Taner is the fund manager and has managed this fund since 2005.

Putnam Global Health Care A (PHSTX - Free Report) primarily invests in growth, value stocks or either type of stocks of mid and large cap healthcare companies. The companies may be ones that provide health care related services, or those who develop or manufacture pharmaceuticals and biotechnology products. The healthcare mutual fund returned 23.06% over the last one year.

As of December 2013, this fund held 99 issues with 5.52% of its assets invested in Gilead Sciences Inc.

ProFunds Pharmaceuticals UltraSector (PHPSX - Free Report) seeks daily returns which are 150% of the daily return of the Dow Jones U.S. Pharmaceuticals Index. To achieve the desired results, it invests in a mix of securities and derivatives. The balance of the fund’s assets is utilized to purchase money market securities. The healthcare mutual fund returned 25.10% over the last one year.

Michael Neches is the fund manager and has managed this fund since 2013.

Schwab Health Care (SWHFX - Free Report) seeks capital appreciation over the long run. It invests the majority of its assets in companies related to the healthcare sector. A majority of the investment is made in domestic companies by using Schwab Equity Rating. A maximum of 25% of its assets may also be invested in foreign countries. The healthcare mutual fund has returned 19.88% over the last one year.

The fund has an expense ratio of 0.82% as compared to category average of 1.44%.

To view the Zacks Rank and past performance of all health mutual funds, investors can click here to see the complete list of funds.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank.

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